Option one is an initial fee of between £150 and £250 for a claimant to begin a claim, with an additional fee of between £250 and £1250 if the claim goes to a hearing, with no limit to the maximum award.

Option two is a single fee of between £200 and £600 – but this would limit the maximum award to £30,000 – with the option of an additional fee of £1,750 for those who seek awards above this amount.

In both options, the tribunal would be given the power to order the unsuccessful party to reimburse fees paid by the successful party.

The Government said that the fee proposals are intended to encourage both sides to give greater consideration to the strength of their case prior to a tribunal. It said that this will save time and money, and suggested that tribunals cost the taxpayer a total of £84 million every year.

According to a Ministry of Justice statement released today, introducing fees will bring employment tribunals into line with civil courts where claimants already pay a fee to use the service. The statement also confirmed that, under the new tribunal fee system, the Government will fund a system of fee waivers for those who cannot afford to pay, similar to the civil court system.

The statement said that there were 218,100 claims to employment tribunals in 2010-11, a 44% increase on 2008-09. The cost to the taxpayer rose from £77.8 million to £84 million over the same period.

Djanogly said: “Currently, the UK taxpayer bears the entire £84 million cost per year of resolving other people’s employment disputes at tribunals. This is not sustainable.

“We believe that people should pay a fair amount towards the cost of their case. Fee waivers will be available for people on low incomes to protect access to justice.

“Our proposed fees will encourage businesses and workers to settle problems earlier, through non-tribunal routes like conciliation or mediation, and we want to give businesses – particularly small businesses – the confidence to create new jobs without fear of being dragged into unnecessary actions.”

The consultation will close in March 2012, with a view to introduce the fees no earlier than 2013-14.